In: Finance
What are intellectual property rights? And why are they important? Why should multinational enterprises and investors pay attention to property rights protection in developing countries such as China?
Intellectual property refers to creations arising from human intellect. They are intangible creations and they include patents, trademarks, etc.
Intellectual property rights are given to people who have created these intellectual properties. These rights provide the creator with an exclusive right over usage on these properties for a certain time period.
Importance of Intellectual Property Rights (IP Rights):
It provides creators motivation to create new inventions. If the IP rights do not exist the creator would not get their due for investing both financially and intellectually in the invention. A lack of IP rights would reduce the research and development of new products and hence would reduce the quality of products coming in the market.
IP rights are varied across the different countries. Thus a patent or trademark registered in a developed country say USA may not hold in a country like China. Not having such protection may prove detrimental for the firm as their creations may get copied and they may not receive the financial benefits. Thus MNC's should pay attention to local IP rights.